The Startup Trenches: How Failure Propelled Me to Success - Gauthereau Group
Inability to scale, outsourcing, and customer acquisition costs are among the many challenges entrepreneurs face within the first few years of a startup’s operations. A 2012 University of Tennessee study revealed that 25% of startups failed in their first year, 36% failed in their second year, and 44% failed in their third year. With my second startup, Alidoo.com, I joined the ranks of first-year failures within eight months. Alidoo was the European equivalent of Pets.com — a hub of commerce, content and community for pet owners. Alidoo was founded during the height of the internet bubble. Back then, an average of 311 companies went public each year in the U.S. compared to 102 per year since. This was a great time for internet startups and Alidoo was no different. We raised millions of Euros only 30 days into operations. We went from 0-60 employees in roughly six months, and all of a sudden, we were like celebrities being interviewed on TV. Unfortunately, roughly 60 days after our TV appearance, the dot-com bubble burst and the market crashed. I was 28 years old.
At the time, I thought it was the end of my life. I thought I would never do anything else.
One of the most important life lessons I learned during this time was that as an entrepreneur, you need to be friends with failure. Despite the pain I experienced at the loss of my compnay, this failure gave me everything I had today. Without Alidoo, I never would have gotten my job at LVMH, which was at the time seeking internet entrepreneurs to help their organization innovate. I might not have ever realized my dream to live abroad in the U.K. and then in the U.S. More importantly, it helped me to discover failure at an early age, and it forced me to learn to work through it and eventually even embrace it, no matter how devastating.
I often speak to a lot of entrepreneurs who have a fear of failing and I always tell them to befriend failure. The majority of successful entrepreneurs have experienced failure in some way. Steve Jobs was fired from Apple. Michael Jordan was cut by his high school basketball coach. Richard Branson’s childhood was filled with failed business attempts.
Even successful startups come across obstacles every day. It’s your team’s ability to quickly work through those obstacles that forms the divide between success and failure.
At the end of Totsy’s first year in business, our warehouse was unable to scale. The holiday season arrived and our logistics center revealed that they didn’t have enough capacity to meet our demand. Unfortunately, the holiday season is the worst time for any product sales organization to be experiencing technical difficulties, and it’s also far from the ideal time to pick up and move to a new logistics center. Our service provider wasn’t being as upfront with us about the trouble we were headed for until it was almost too late. Thankfully, we were able to rectify the situation and continue with our operations as planned, but not without the fallout of some of our valued customers receiving their orders later that what was acceptable. However, without the quick recovery our team achieved, the result could have been far more disastrous, possibly enough to damage the reputation and finances of the company beyond repair.
Whatever your recent failures might have been, I would encourage you to approach these challenges as friends and teachers that can help propel you to future success, as long as you have the ability to draw the right lessons.
Do you have any stories from the trenches you would like to share with us? Let me know in the comments section. Look forward to hearing about it.